Thursday, December 9, 2010

How Best To Help the Poor...and Everyone Else

by John Russell Turner


The Laffer Curve
 Liberals and conservatives usually agree on the importance of helping the unfortunate ones amongst us, the poor and downtrodden; all or most of the disagreement today is on the means to this ends. How do we help the poor?

The left wing answer is: let the government handle it. They have lots of money and other resources, so they can do the job better than any one of us can.

The right wing answer is: let private charities and individuals do what they can to ease the sufferings of others. Maintain a culture where the individual is free to earn as much money as his abilities allow him. The government should stay out of the altruism business because it must tax it's citizens in order to do anything, and this means less money in everyone's pockets-which means people will be less likely to invest. And since investing creates jobs, with decreased investment there will be fewer jobs. Let's face it, gainful employment is the cure for poverty. It will totally eliminate it, if the individual acts rationally.

These are the basics of the arguments on both sides. Some would say that a little bit of government and a little bit of private charity can't hurt. That's what we have in place today. To fully understand why such a mixture is immoral, and in the long run will lead to societal collapse, it is important to see taxation for what it really is.

Taxation is not production, it is not earned income; taxation is money taken by the government from its' citizens so the government can operate. Because it is not production, but rather a tax on production, government growth must be funded by those in the economy who make money and wealth. At certain levels of taxation, most of us can still do whatever it is we are planning; there is money left over to invest in a mutual fund, stocks and bonds, or in a business of our own...but there comes a point when the amount of taxes we pay influences our other economic activity. With less money, we are less inclined to take risks. With less money, we do not invest it anywhere but at home. Taxes risen past a certain point actually winds up sending less money to the government treasury-the famous "Laffer Curve".

The problem is the government has a lot of projects and programs it administers and funds. Also, a question arises: is it appropriate for the government to do anything at all except govern? When and how did it get in the business of altruism, social engineering, and such? This is a relevant question because people have property rights at birth-all of us must be free to keep what we own, otherwise we cannot survive at all-therefore, the right to property is about as important and just as equal as the right to live! People should keep as much of what they earn as possible. But when the government decides to go past its' proper role in human affairs, it is we who must pay for it, and suppose we don't want to pay (with our hard earned money) for the various government programs out there? Well, we get arrested, of course, and sent to jail-and don't think about refusing to go to jail, because they'll kill you if you put up a strong enough resistance. This illustrates perfectly what the government and an armed robber have in common, and gives a clue as to why government help programs are immoral. They are a drain on the economy, it's not the government's job to be in any kind of business except governing, they violate the property rights of others (as any wealth transfer scheme does), and they all essentially rely on the use of physical force. Finally, as more and more money is taxed away from the productive (this includes wage earners), the incentive to work is weakened, and in some cases, eliminated. The economy stagnates. People produce less, and government revenue rapidly declines. Soon, the government cannot even fund its' most basic, proper functions, and anarchy results.

The solution to poverty, therefore, is an environment of free enterprise with minimal taxation and regulations, thus creating more jobs (and more entrepreneurs), thus giving more people the ability to create wealth.

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